In this article, we discuss the 10 stocks Jeffrey Altman’s Owl Creek Asset Management is buying.
Founded by Jeffrey Alan Altman in 2001 and headquartered in New York, USA, Owl Creek Asset Management is a medium-sized hedge fund that has gained a large influence in the industry since its inception. With 17 clients and a portfolio value of $2.178 billion, the hedge fund focuses on finance, utilities and telecommunications.
As of the second quarter, the fund has stakes in several companies, including big names like Alphabet Inc. (NASDAQ:GOOG), Alibaba (NYSE:BABA), and Cano Health, Inc. (NYSE:CANO).
In the second quarter of 2021, as per Owl Creek’s 13F filings, its top ten holdings made up a whopping 57.1% of the firm’s portfolio, with a major concentration of the portfolio value consisting of utilities and telecommunication. Moreover, the hedge fund made new purchases in 167 stocks, bought additional purchases in 20 stocks, sold out of 102 stocks, and reduced holdings in 19 stocks.
Jeffrey Altman of Owl Creek Asset Management
Why pay attention to Own Creek’s stock picks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Our Methodology
Keeping this in mind, let’s get into the 10 stocks Owl Creek Asset Management is buying. The companies listed in the article are picked from the investment portfolio of Owl Creek Asset Management at the end of the second quarter of 2021.
Jeffrey Altman’s Owl Creek Asset Management is Buying These 10 Stocks
10. Cigna Corporation (NYSE:CI)
Owl Creek’s Stake Value: $84,869,000
Percentage of Owl Creek’s 13F Portfolio: 3.89%
Number of Hedge Fund Holders: 63
Based in Connecticut, USA, Cigna Corporation (NYSE:CI) is a multinational managed healthcare and insurance company. Owl Creek has an $84 million stake in the company as of the end of June.
Artisan Value Fund, in its Q4 2020 investor letter, mentioned Cigna Corporation, emphasizing their confident views on the company. Here is what the fund said:
“New purchases include Cigna. Cigna is a leading managed care company which operates through the following major segments: health services, integrated medical, international markets and group disability. It’s one of the few managed care organizations in the United States with the scale and size to compete effectively. Cigna has recently focused on deleveraging its balance sheet and further diversifying its business, after completing the Express Scripts acquisition in late 2018. Additionally, the company has partnered with Amazon, which will offer two new pharmacy options—including a self-pay offering. Cigna will administer the self-pay option through its health services division Evernorth. The partnership should be one of many strong earnings drivers for Cigna, which we believe is currently trading at an attractive valuation.”
9. Exelon Corporation (NASDAQ:EXC)
Owl Creek’s Stake Value: $86,010,000
Percentage of Owl Creek’s 13F Portfolio: 3.94%
Number of Hedge Fund Holders: 35
Exelon Corporation (NASDAQ:EXC), based in Chicago, USA, is a Fortune 100 energy company ranked at number 9 on the list of 10 best stocks Owl Creek Asset Management is buying.
In the third quarter, Exelon posted an EPS of $1.09, beating estimates by $0.01. Revenue in the quarter jumped 0.7% and beat estimates by $420 million at $8.91 billion.
8. General Motors Company (NYSE:GM)
Owl Creek’s Stake Value: $86,125,000
Percentage of Owl Creek’s 13F Portfolio: 3.95%
Number of Hedge Fund Holders: 86
Owl Creek has an $86 million stake in General Motors as of the end of June.
Recently, Wedbush Securities praised the company over its EV efforts. Analyst Dan Ives said he believes the company’s EV story is going to get recognized by the Street. Ives thinks General Motors (GM) can convert 20% of its massive customer base to EVs by 2026.
Junto Investments, in their investor letter of Q4 2020, mention General Motors Company (NYSE:GM). Here is what they said:
“General Motors was the biggest gainer. We managed to buy it at a screamingly cheap price in the middle of March. A lot of interesting news has emerged about GM recently, including the new electric product delivery system BrightDrop and GM Cruise’s team-up with Microsoft Azure to commercialize self-driving cars in 2021. GM’s intrinsic value is crystallizing and the company is worth a whole lot more than is still reflected in the market.”
7. Equitable Holdings Inc. (NYSE:EQH)
Owl Creek’s Stake Value: $86,399,000
Percentage of Owl Creek’s 13F Portfolio: 3.96%
Number of Hedge Fund Holders: 45
On July 19, Citi analyst Suneet Kamath kept a Buy rating on Equitable Holdings Inc. (NYSE:EQH).
As of the end of the second quarter, 45 funds in the database of Insider Monkey reported owning stakes in the company.
In the third quarter, the company’s adjusted EPS came in at $1.94, beating the estimates by $0.55. Revenue jumped 95% in the period.
6. Facebook Inc. (NASDAQ:FB)
Owl Creek’s Stake Value: $93,308,000
Percentage of Owl Creek’s 13F Portfolio: 4.28%
Number of Hedge Fund Holders: 266
Facebook, now Meta Platforms Inc., is one of the most famous stocks among the elite hedge funds tracked by Insider Monkey. A total of 266 funds held stakes in the company at the end of June.
In its Q2 2021 investment letter, First Eagle Investment Management has remarked positively about Facebook. Here is what the letter said:
“Leading contributors in the First Eagle Global Fund this quarter included Facebook, Inc. Class A. Facebook has continued to post impressive results for both revenue and active users of its traditional platforms. In the meantime, the social media giant continues to make progress on new initiatives—like Facebook Horizon (virtual reality) and Facebook Shops (e-commerce)—and maintains attractive monetization optionality around services like Messenger and WhatsApp.”
5. Amazon.com Inc. (NASDAQ:AMZN)
Owl Creek’s Stake Value: $96,668,000
Percentage of Owl Creek’s 13F Portfolio: 4.43%
Number of Hedge Fund Holders: 271
Amazon.com Inc. is a multinational conglomerate headquartered in California, USA, which focuses on e-commerce, artificial intelligence, and digital streaming.
In its investor letter for Q2 2021, L1 Capital mentioned Amazon.com. Here is what the letter said:
“Amazon flipped from being the largest detractor from portfolio performance in the March 2021 quarter, to one of the leading contributors in the June 2021 quarter. We took advantage of negative near-term sentiment in the March 2021 quarter to add to our Amazon investment. We continue to view Amazon as one of the best positioned businesses globally, with its share price still not reflecting fair value.”
4. T-Mobile US Inc. (NASDAQ:TMUS)
Owl Creek’s Stake Value: $112,659,000
Percentage of Owl Creek’s 13F Portfolio: 5.17%
Number of Hedge Fund Holders: 100
T-Mobile US Inc. is placed at number 4 in the list of the 10 stocks Owl Creek Asset Management is buying.
On September 20, analyst Stephan Bisson from Loop Capital gave T-Mobile a Buy rating and a price target of $160.
In ClearBridge Investments’ investor letter of Q1 2021, T-Mobile US was mentioned. Here is what the letter said:
“The portfolio’s quality bias and valuation discipline have generated compelling returns over time with typically strong relative results in more challenging environments as it did through the first three quarters of 2020. However, that same quality bias tends to create a more challenging relative performance environment for the Strategy during periods of sharp economic acceleration, which tend to benefit stocks that are more commodity linked or of lower quality. This has been the case during the vaccine- and stimulus-driven rally experienced late last year and during the most recent quarter. Sectors that lagged in the quarter included communication services, where T-Mobile trailed after generating robust returns earlier in the recovery.”
3. PG&E Corporation (NYSE:PCG)
Owl Creek’s Stake Value: $126,644,000
Percentage of Owl Creek’s 13F Portfolio: 5.81%
Number of Hedge Fund Holders: 64
PG&E Corporation is an investor-owned natural gas and electric service provider based in the USA.
In its Q4 2020 investor letter, GoodHaven Capital Management positively mentions PG&E Corporation. Here is what the letter says:
“During the period we purchased a new holding – PG&E Corporation – the California based utility (PCG). We expect that contrarian special situations will continue to (opportunistically) be an important part of the portfolio. After all, we bought PCG – which has filed Ch. 11 twice related to prior exposure to wildfire liabilities and staggering mismanagement – right in the middle of California’s recent heavy wildfire season. Our thinking here is that the reorganized utility has new regulatory protections that significantly reduces wildfire liability exposure, an above average rate growth profile and potentially much better management – they were searching for a new CEO when we made our investment. We purchased the stock at a high single digit forward earnings multiple, a discount to its peers that trade in the mid to high teens. Shortly after our purchases PG&E hired the well-regarded Patti Poppe as their new CEO – we like this decision.”
2. Old Republic International Corporation (NYSE:ORI)
Owl Creek’s Stake Value: $146,369,000
Percentage of Owl Creek’s 13F Portfolio: 6.71%
Number of Hedge Fund Holders: 26
Old Republic International Corporation is placed at number 2 on our list of the 10 stocks Owl Creek Asset Management is buying. Old Republic is an American property insurance and title company headquartered in Chicago.
In the investor letter by Third Avenue Management, ORI was highlighted. Here is what the letter said:
“During the quarter the Fund initiated a position in Old Republic, which operates in several lines of insurance. Old Republic’s largest exposures are in specialty property and casualty segments including trucking insurance, workers’ comp and variety of others. The company has generally been a decent underwriter, historically speaking, in spite of the fact that trucking insurance has been a particularly challenging business due to a trend of rising claims and surprisingly large claim awards. That trend has caused a number of insurers to cease writing trucking insurance and the remaining players to substantially re-price those risks. We would expect Old Republic’s underwriting results to improve going forward. Old Republic is also one of the largest players in the oligopolistic title insurance market. The first function of title insurance is the mitigation and near-elimination of title risk in residential and commercial real estate transactions. The second function is to insure against any residual risk. For this reason, title claims tend to be rare, required regulatory capital in the business tends to be small, and returns on that capital tend to be quite high. Pure players in the title insurance industry, who are Old Republic’s direct competitors, are typically highly profitable and trade at substantial premiums to book value. Finally, Old Republic’s consolidated results and returns on equity have been dragged down for years by a book of business that is in runoff. While the existence of the runoff portfolio tends to drag on consolidated returns, as it liquidates it will continue to free up equity, which the company will likely continue distributing to shareholders in the form of special dividends. Taking all of these things together, it appears likely that Old Republic’s operating performance can improve meaningfully over time and that, in any event, the consolidated valuation, at or below tangible book value, even after making adjustments for recent capital market turmoil, materially understates the sum of its parts. More qualitatively, the company has historically had a reputation for being less than eager to engage the investment community, but we believe there has been a reconsideration of this posture coinciding with a recent management succession and new hires. To the extent that Old Republic is more proactive in explaining each of these drivers of improving operating performance and the degree to which the company is substantially undervalued, we would expect the result to be a positive impact on the share price.”
1. Anterix Inc. (NASDAQ:ATEX)
Owl Creek’s Stake Value: $324,652,000
Percentage of Owl Creek’s 13F Portfolio: 14.9%
Number of Hedge Fund Holders: 18
Anterix Incorporation is placed at number 1 on our list of the 10 stocks Owl Creek Asset Management is buying. The company provides wireless communication assets, focusing on smart infrastructure and cities.
On June 17, Anterix Inc.’s price target was raised from $50 to $60 by JPMorgan Chase (NYSE: JPM).
Steel City Capital mentioned Anterix Inc. in its investor letter. Here is what the letter said:
“The Partnership’s largest position, by leaps and bounds, is Anterix (ATEX). The company is the largest holder of licensed spectrum in the 900 MHz band. After successfully petitioning the FCC to convert the band’s allocation from narrowband to broadband, ATEX is now in the process of monetizing its spectrum holdings via long-term leases and outright sales. The company has focused almost exclusively on electric utilities who need secure wireless broadband networks to connect the rapidly proliferating sensors and devices used by new grid management applications. ATEX has earned its place as the Partnership’s largest position on account of 1) a large disconnect between its price and the private market value of its spectrum (on a MHz-Pop basis), 2) a clearly articulated plan to realize the spectrum’s underlying value, and 3) an event-driven profile which should be uncorrelated with the overall direction of the market.”
You can also take a peek at 10 Best Solar Energy Stocks To Buy Now and 15 Best Warren Buffett Stocks to Buy Now.
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This article is originally published at Insider Monkey.
